- The NZD/USD recovers positive traction on Wednesday in the midst of a modest weakness of the USD.
- The reduction of expectations to a RBNZ rate cut signs the NZD and further supports cash prices.
- Geopolitical risks and commercial uncertainties could limit progress before the Fed decision.
The NZD/USD par attracts some purchases around the psychological level of 0.6000 during the Asian session on Wednesday and reverses part of the backward drop in the previous day from the proximity of the maximum of the year to date. However, cash prices remain confined within a family range maintained during the last two weeks and currently quote around the 0.6030 area while the traders wait with interest in a two -day FOMC policy meeting.
The US Federal Reserve (FED) has scheduled to announce its decision later during the US session and is widely expected to maintain its reference rate without changes in the middle of the concern that the tariffs of US President Donald Trump could increase consumer prices. Therefore, the accompanying policy statement, which includes the updated points graph, and the comments of the president of the FED, Jerome Powell, during the press conference after the meeting will be examined closely in search of clues on the future path of feat cuts. This, in turn, will play a key role in influencing the pricing dynamics of the American dollar (USD) in the short term and will provide a significant impulse to the NZD/USD torque.
Looking ahead to the key risk event of the Central Bank, the expectations that the Fed resume its cycle of feat cuts in September in the midst of inflation relaxation signals and an economy in deceleration fails to help the USD to capitalize on the strong upward movement of the previous day. This, together with the increase in bets for only one more rates cut by the New Zealand Reserve Bank (RBNZ), acts as a tail wind for the New Zealand dollar (NZD) and the NZD/USD torque. However, a combination of factors could limit any additional gain.
Investors remain in tension amid persistent uncertainties related to trade and increased geopolitical tensions in the Middle East. Therefore, it will be prudent to wait for a sustained force above the resistance zone of 0.6065-0.6070 before making new bullish bets around the NZD/USD and position itself for any short-term significant rise movement.
New Zealand Faqs dollar
The New Zealand dollar (NZD), also known as Kiwi, is a well -known currency among investors. Its value is largely determined by the health of the neozyous economy and the policy of the country’s central bank. However, there are some peculiarities that can also make the NZD move. The evolution of the Chinese economy tends to move Kiwi because China is the largest commercial partner in New Zealand. The bad news for the Chinese economy is probably translated into less neozyous exports to the country, which will affect the economy and, therefore, its currency. Another factor that moves the NZD is the prices of dairy products, since the dairy industry is the main export of New Zealand. The high prices of dairy products boost export income, contributing positively to the economy and, therefore, to the NZD.
The New Zealand Reserve Bank (RBNZ) aspires to reach and maintain an inflation rate between 1% and 3% in the medium term, with the aim of keeping it near the midpoint of 2%. To do this, the Bank sets an adequate level of interest rates. When inflation is too high, RBNZ rises interest rates to cool the economy, but the measure will also raise bond performance, increasing the attractiveness of investors to invest in the country and thus boosting the NZD. On the contrary, lower interest rates tend to weaken the NZD. The differential type of types, or how they are or is expected to be the types in New Zealand compared to those set by the Federal Reserve of the US, can also play a key role in the NZD/USD movement.
The publication of macroeconomic data in New Zealand is key to evaluating the status of the economy and can influence the valuation of the New Zealand dollar (NZD). A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and can encourage the New Zealand reserve bank to increase interest rates, if this economic strength is accompanied by high inflation. On the contrary, if the economic data is weak, the NZD is likely to depreciate.
The New Zealand dollar (NZD) tends to strengthen during periods of appetite for risk, or when investors perceive that the general market risks are low and are optimistic about growth. This usually translates into more favorable perspectives for raw materials and the so -called “raw material currencies”, such as Kiwi. On the contrary, the NZD tends to weaken in times of turbulence in markets or economic uncertainty, since investors tend to sell the most risky assets and flee the most stable shelters.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
